Research Firm: DRAM Supply Condition Upgraded to ‘Positive’

Research firm iSuppli has upgraded near-term conditions for DRAM supply to "Positive," noting that increased PC demand, along with some DRAM makers shifting some production capacity to NAND flash, caused the change. "With inventories at rock-bottom levels, DRAM prices are beginning to rise on the spot memory market," iSuppli director and principal analyst Nam Hyung Kim said in a press release.

DRAM supplies are currently at their lowest level since January 2005, with 1.92 weeks of inventory in the global supply chain, down from 2.35 weeks in July, when near-term conditions were rated "Neutral" by iSuppli. Stockpiles were close to three weeks 20 months ago. DDR SDRAM supplies are tightest, at 0.99 weeks, while DDR2 inventory sits at 2.46 weeks. iSuppli noted demand has remained strong for Intelis legacy chipsets, which use the older DDR SDRAM.

iSuppli expects DRAM inventory to continue to decline this month. Potential risks, however, include the fact that Samsung may be converting some of its production capacity from NAND flash to DRAM, which offers higher margins. If Samsung follows through on those plans, increased supplies will drive down prices.